Equity Value Enhancement

Chapter 6The Role of Relationships

While I refer to this as optics, the perception of the decision maker is paramount, which can often be demonstrated by his or her fee aversion. What is the correlation with the fees charged and the solution or opportunity found? That's the calculus of the owner who writes the check.

Do you want to create an awkward moment for an advisor paid an hourly rate or a commission who is seeking a business relationship? Simply inquire whether the amount paid is for services or products rendered. That is referred to as “price” paid. That then sets up the second issue of “worth.” Since the price is established, the natural orientation is to seek a lower rate.

This is wholly different from the notion of “value” received. Value requires one to articulate that the outcome will be far more favorable than amount paid. Otherwise, why would examination of relationships versus transactions and technical or tactical advice differ?

In Chapter 5, “The Role of Governance,” leadership and strategy along with other issues are discussed. The premise of Chapter 5 is the need to harness both financial and human capital. The challenge of obtaining such leverage of human capital is to identify resource gaps: often ones of skills, temperament, time, and funds. Then there are the dual issues of prioritizing the filling and managing of these constituency gaps.

Because there are multiple perspectives, the time and ability to achieve constituent alignment require a more ...